Monday, May 20, 2013

The Calculus of University Presidents

Money-bagsThis week's National Law Journal has a Special Report section on the challenges facing law schools.  Karen Sloan has several stories on how law schools are finding alternative sources of revenues beyond tuition dollars for JD degrees (masters's degrees for nonlawyers, online LLMs, and lawyer executive education).  

I contributed an essay entitled "The Calculus of University Presidents."  Although the essay is posed as the letter I would write to a university president seeking advice on how to handle a significant, unexpected shortfall in law school revenues, the intended audience is lawyers and legal educators seeking to get a handle on the brutal economics that are now threatening the survival of a large swath of law schools.  

From the perspective of many, it would be nice if things would go back to the way they used to be. But that is not going to happen.  Good lawyers understand that we gain no long-term advantage from hiding from these facts. Instead, we need to confront them honestly and proactively.

[posted by Bill Henderson]

May 20, 2013 in Blog posts worth reading, Current events, Data on legal education, Data on the profession, New and Noteworthy, Structural change | Permalink | Comments (2)

Wednesday, April 17, 2013

The Fromm Six

Last month, The National Jurist published an article I wrote that was a tribute to Leonard ("Len") Fromm, Dean of Students at Indiana Law from 1982 to 2012.  Len passed away in February. The editors at The National Jurist supplied the official title, which I thought was spot on: "What Every Law Student Needs to Excel as an Attorney: Introducing the Fromm Six." [original PDF]  I am republishing the essay here because I want as many people as possible to know the story and contribution of this truly great man. [posted by Bill Henderson]

Introducing the Fromm Six, National Jurist (March 2013).

FrommOne of the greatest people in legal education that you have never heard of is a man named Leonard Fromm.   Fromm served as Dean of Students at Indiana University Maurer School of Law from 1982 to 2012.  On February 2, 2013, Dean Fromm passed away after a relatively short battle with cancer.

I want to discuss an innovation that Dean Fromm contributed to legal education—a contribution that, I predict, will only grow over time.  This innovation is a competency model for law students called the Fromm Six.  But first, let me supply the essential background.

After several years in counseling and adult education, Dean Fromm joined the law school in 1982 to preside over matters of student affairs.  Over the course of three decades he quietly became the heart and soul of the Maurer School of Law.  Dean Fromm was typically the first person that new students met during orientation—the law school administrator who completed character and fitness applications for state bar authorities and the voice that called out their names at commencement (with an amazing, booming tenor).   During the three years in between, Dean Fromm counseled students through virtually every human problem imaginable.  His most difficult work was done in his office with his door closed and all his electronic devices turned off.  It was private work that was not likely to produce much fanfare.

During his tenure at Indiana Law, Dean Fromm’s title was expanded to include Alumni Affairs.   The change did not expand his duties in any significant way—Len was already working 70 hours a week in a job he loved. Rather, the change reflected the fact that Indiana Law alumni associated (and often credited) Dean Fromm with the deepest and most abiding lessons of law school—overcoming self-doubt; confronting self-destructive behavior; recognizing the importance of relationships; finding the courage to try something again after disappointing failure; or discovering the ability to see the world through the eyes of one’s adversary or opponent.

One of the cumulative benefits of Dean Fromm’s job was the ability to track the full arc of lawyers’ careers, from the tentative awkwardness of the 1L year, to involvement in the school’s extracurricular events and social scene, to coping strategies for students not at the top of their class, and the myriad, unexpected turns in our graduates’ professional careers.  During his tenure he interacted with nearly 6,000 students and stayed in contact with a staggering number of them after graduation.  Invariably, he saw the connection between law school and a student’s subsequent success and happiness later in life (noting, in his wise way, that professional success and happiness are not necessarily the same thing).

In 2008, I started collaborating with Len on a project to construct a law school competency model.  Our first iteration was a list of 23 success factors  which we constructed with the help of industrial & organizational (IO) psychologists.  Although valid as a matter of social science, the list was too long and complex to gain traction with students.  In 2010, the faculty who taught Indiana Law’s 1L Legal Professions class got together and reduced the list of competencies to 15.  Once again, we found it was too long and complex to execute in the classroom.  

During the summer of 2011, as we were debriefing the challenges of another year in our competency-based 1L Legal Professions course, Dean Fromm said, “I have an idea.” A short time later, he circulated a list of six competencies that were appropriate to 1Ls and foundational to their future growth as professionals.   Finally (or At last), we now had a working tool!  Moreover, none of the professors teaching the Legal Professions course, including me, wanted to revise a single word—a veritable miracle in legal academia. 

Upon reviewing the list I kidded Len that the new IU competency model should be called “The Fromm Six”, which was a play on the famous “Big Five” personality model that forms the bedrock of scientific personality testing. (Len had a Masters degree in Counseling Psychology as well as a law degree.)  He just laughed.  But the “Fromm Six” had a lot of resonance with the rest of us so the label stuck.

In May 2012, Dean Fromm retired from his position as Dean of Students and Alumni Affairs.  At age 70 he was preparing to join us in teaching the 1L Legal Professions course.  This was to be in addition to his usual Negotiations class, where he was a master.  Instead, within a few weeks of retirement, Len was diagnosed with a virulent cancer that never let go.  

None of us can make sense of Len’s death as it abruptly ended a life of complete, unselfish service to a large community of students, faculty and graduates.  But, as best I can, I am inclined to pay tribute to his life.  And to my mind, there is no greater tribute than to publish and publicize the Fromm Six so that another generation of lawyers can benefit from his wisdom, grace and kindness. 

Here are the Fromm Six:

Self-Awareness Having a highly developed sense of self. Being self‐aware means knowing your values, goals, likes, dislikes, needs, drives, strengths and weaknesses, and their effect on your behavior.  Possessing this competence means knowing accurately which emotions you are feeling and how to manage them toward effective performance and a healthy balance in your life. If self‐aware, you also will have a sense of perspective about yourself, seeking and learning from feedback and constructive criticism from others.

Active Listening The ability to fully comprehend information presented by others through careful monitoring of words spoken, voice inflections, para‐linguistic statements, and non‐verbal cues. Although that seems obvious , the number of lawyers and law students who are poor listeners suggests the need for better development of this skill.  It requires intense concentration and discipline. Smart technology devices have developed a very quick mode of “listening” to others. Preoccupation with those devices makes it very challenging to give proper weight and attention to face‐to‐face interactions. Exhibiting weak listening skills with your colleagues/classmates/clients might also mean that they will not get to the point of telling you what they really want to say.  Thus, you miss the whole import of what the message was to be.

Questioning The art and skill of knowing when and how to ask for information. Questions can be of various types, each type having different goals. Inquiries can be broad or narrow, non‐leading to leading. They can follow a direct funnel or an inverted funnel approach.   A questioner can probe to follow up primary questions and to remedy inadequate responses.  Probes can range from encouraging more discussion, to asking for elaboration on a point, to even being silent. Developing this skill also requires controlling one’s own need to talk and control the conversation.

Empathy Sensing and perceiving what others are feeling, being able to see their perspective, and cultivating a rapport and connection. To do the latter effectively, you must communicate that understanding back to the other person by articulating accurately their feelings. They then will know that you have listened accurately, that you understand, and that you care. Basic trust and respect can then ensue.

Communicating/Presenting The ability to assertively present compelling arguments respectfully and sell one’s ideas to others.  It also means knowing how to speak clearly and with a style that promotes accurate and complete listening.  As a professional, communicating means persuading and influencing effectively in a situation without damaging the potential relationship.  Being able to express strong feelings and emotions appropriately in a manner that does not derail the communication is also important.

Resilience The ability to deal with difficult situations calmly and cope effectively with stress; to be capable of bouncing back from or adjusting to challenges and change; to be able to learn from your failures, rejections, feedback and criticism, as well as disappointments beyond your control. Being resilient and stress hardy also implies an optimistic and positive outlook, one that enables you to absorb the impact of the event, recover within a reasonable amount of time, and to incorporate relevant lessons from the event.

April 17, 2013 in Blog posts worth reading, Innovations in legal education, New and Noteworthy | Permalink | Comments (0)

Monday, April 1, 2013

Question Authority: Law students have an important role to play in the future of legal education

National-jurist-logoI continue to be grateful to the National Jurist for giving me an opportunity to write a column targeted directly to law students.   As an educator, I have found these assignments very useful toward developing a better understanding of my own students at Indiana Law. In the process, I hope I am providing some useful, realistic guidance to the next generation of lawyers

In my 2013 column, I urge law students to ask us law professors tougher questions about the current state of legal education, albeit with respect.  If they ask tough questions, we will all be better off.  It is republished below. [Original PDF]

Question Authority: Law students have an important role to play in the future of legal education, National Jurist (Jan. 2013)

by William D. Henderson

I recently gave a keynote address in which I admonished a large group of law students to “question authority.”  It certainly sounds cliché – after all, it was the rallying cry of countercultural icon Timothy Leary during the 1960s.  A decade later, it was mainstream bumper sticker. But the admonition has a much more distinguished pedigree.  Benjamin Franklin is reported to have said that “the first responsibility of every citizen to question authority.”  

I wish I had known the source of the quote when I gave the speech.  But regardless, it fit the context. Today’s law students are embarking upon an uncertain future.  Although I can understand the impulse to trust your elders, there are times of extreme upheaval when they cannot be counted upon to deliver wise counsel.  

Reluctantly, through the passage of time, I have become an elder.  And for the legal profession and legal education, we are entering one of those periods of great tumult.   To come out the other side, better and stronger, we need two things from the up-and-coming generation of law students. 

 First, we need your skepticism to question our methods and our motives.  The legal marketplace is undergoing significant changes.   We did not adequately anticipate these disruptions.  In addition, we do not fully understand their breadth and depth.    Because we are human, we are reluctant to admit our confusion.   Even worse, we may even deny there is a problem.  After all, the confluence of high student debt and a soft legal market happened on our watch. 

Second, we need your youthful energy to refashion legal education in a way that is much more consistent with our professional ideals.  All lawyers covet prestige, but over the last decades we have confused prestige with money and rankings.  As a historical matter, lasting legal reputations are disproportionately traceable to a lifelong willingness to doggedly and creatively advance the welfare of others.   Even today, the best lawyers find ways to faithfully serve their clients while simultaneously advancing the public good. We need your generation to lay the foundation for a renaissance in which our collective behavior more closely hews to our ideals. This is a goal worthy of your time and talent.

 If you are going to be effective at questioning authority (and unless you are going to be effective, why do it all?), you need to practice.  Well, I am 50-year old tenured law professor.  I create the syllabus, I decide how you will be evaluated, and I assign student grades.  Much to my chagrin, I have accumulated some authority.  So feel free to practice your questioning on me. 

Here is the world as I see it.  I could be wrong.  But even worse, I may be partially right.  

The entry-level job market for law graduates is tough right now.  But if you had not enrolled in law school, your employment prospects would be no less murky.  As noted by the popular author, Daniel Pink (himself a law school graduate), in his book, A Whole New Mind, we are living in time where every young person must compete against three formidable forces:  Asia, Automation, and Abundance. 

The Asian continent is formidable because nations such as India and China are leapfrogging into world economy with enormous quantities of ambitious, technically competent young people. 

Automation is formidable because so much of human activity, including law, is reducible to patterns.  This means solutions can be standardized, thereby displacing a significant amount of mental analysis that lawyers now perform for clients on a matter-by-matter basis.  (See also my September 2012 column, “Why are we Afraid of the Future of Law?”) 

Abundance is formidable because the flipside of the consumer society that has given us so many cheap, high quality choices is a producer economy in which expensive university educations provide us with skills that becoming more and more fungible.  

To my mind, today’s university educators are not responsible for the challenges created by Asia, Automation, and Abundance.  These are massive structural and economic forces that are hard to forecast and impossible to control.  Yet, as university educators who benefit from your tuition dollars, we are responsible for formulating effective responses.  Although we might prefer to focus on a different set of challenges, this one should take top priority because its weight falls disproportionately not on us, but on you.

 So you need to ask us, “How well is this education helping us adapt to the challenges of Asia, Automation and Abundance?”  Some of us might reply that the threat is overstated.  Well, are you convinced?  What evidence supports this assessment?   

Alternatively, others of us might reply that the challenges are very real, but fortunately, the core elements of traditional legal education are an excellent preparation.  Well, are you convinced?  Further, is it possible that our inability or reluctance to retool may cloud our judgment and influence our reply?  The iconoclastic author and economist John Kenneth Galbraith once observed, “Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.” 

A third response may be, “I don’t know.  These are a hard set of issues.  And they need to be solved.”  When a professor responses in this way, it is hard to question their motives.  Further, you may have found someone with authority who is willing to take up your cause. 

At the beginning of this essay, I failed to mention one key proviso to my “question authority” admonition.  I told the law students that when they question authority, they should do it respectfully.  Indeed, all of my life experience has shown me that effectiveness in human relations requires a foundation of mutual respect.  Your elders did not create the challenges that lie ahead.  We are not your enemy.  Our limitation is that we are human, and therefore imperfect; and so are you. 

 Yet, if you question authority persistently but respectfully, you will be doing yourself, legal education, and the legal profession an enormous service.

 If you think my ideas and analysis are wrong, you are free to question my authority.

April 1, 2013 in Blog posts worth reading, Current events, Structural change | Permalink | Comments (1)

Thursday, February 28, 2013

The Law of Too Many Words

Ron Friedmann sees something that a lot of us law professors are failing to see, here.

[posted by Bill Henderson]

February 28, 2013 in Blog posts worth reading | Permalink | Comments (0)

Sunday, February 24, 2013

A Poor Man's Newcomb Problem, aka The Game of Life

LifeI have a running philosophical and existential debate with my good friend Jeff Lipshaw.  If I did not love Jeff, I would not blog with him. Anyway, Jeff has a tendency -- in my opinion -- to get bogged down in high theory. See, for example, his post on the Newcomb Problem.  Here is a poor man's version of the Newcomb Problem.  It has been described to me as "The Game of Life": 

Imagine that the game of life is played in an arena with a small rectangular field in the center.  Only 25% go onto the field.  75% stay in their seats waiting for more information.  Of the 25% who go onto the field, 4 out of 5 come back to their seats when they realize that they may not win the game.  They don't want to be embarrassed, so they quit.  In the end, only 5% are really living – doing their best with no guarantees but knowing what it is like to be fully alive.

So applying this insight to Jeff's Newcomb problem, the moral of the story is very simple:  Pick Box B, and only Box B.  Everything else is just mental obfuscation.

[posted by Bill Henderson]

February 24, 2013 in Blog posts worth reading | Permalink | Comments (1)

Wednesday, February 13, 2013

Jim Moliterno Answers Questions on W&L's 3L Program; Supplies Additional Data on W&L

My previous post on Washington & Lee's 3L Program stirred a lot of interest and commentary, including some disbeleiving critics.  Fortunately, Professor Jim Moliterno agreed to write a reply essay, below, that completes the cycle. [Bill Henderson]

  MoliternoJim Moliterno Replies  [This is a long reply, so a PDF version online here]

A number of comments to Bill’s January 28 post and posts regarding it on other blogs cause me to enter this conversation.

Are students really coming to W&L because of the new curriculum?  Yes, to a significant extent. How do we know?  Because the entering students say so. As do many law schools, we administer a questionnaire to our enrolling students. Among the questions asked is the obvious one: why are you here?  

In the most recent such survey the students were asked to rank the strengths of the law school. Here are the top ten, in order, according to the entering students:

  1. Third Year Curriculum
  2. Ranking / Prestige
  3. Quality of Life
  4. National Reputation
  5. Job Placement
  6. General Cirriculum
  7. Clinical Program
  8. Faculty
  9. Financial Aid Award
  10. Size of Lexington

The curriculum reform was first.  Financial aid awards were 9th, just ahead of the “size of Lexington.” The data does not support the unsubstantiated claims of some bloggers that students are choosing W&L because of the generosity of financial aid awards. 

The curriculum reform has steadily moved higher on the “strength” rankings given by enrolled students since 2009. The 2011 and 2012 surveys are nearly identical, and the written comments of students about their reasons for coming to W&L (none reprinted here), are more striking than the numbers themselves.

I don’t know of any better data on this proposition but the statements of those whose reasons are under study. If that data is unsatisfying to some, then they will continue to be unsatisfied.

Are there other reasons students come to W&L? Of course. W&L has a highly productive, highly visible  faculty engaged in scholarship and projects at the highest levels. Some students undoubtedly value W&L’s faculty prowess.  W&L is highly ranked. Some students undoubtedly are affected by a top 25 ranking. It has an excellent reputation as a small, closely-knit academic community.  Some students select for the sense of community and size. No reason will ever be the only reason for prospective students to choose a law school.  Changes made by law schools will affect student choices for or against a particular law school. The W&L curriculum reform is positively affecting a significant number of students’ calculus about choosing W&L.   

And some do come because of the financial aid package they were offered.  But the financial aid reason is unlikely to explain the increase in applications since 2008. Some students, the recipients of aid, undoubtedly come in part because of the aid.  That is no different than the students who choose [insert name of any school] because of the financial aid they were awarded.   In 2012, about the same number of offers of admission were made as in previous years, but instead of the usual 130 or 135 admittees choosing to attend, more than 260 made deposits. Some were asked to defer their attendance until 2013 and once the dust settled we had a class of 187 instead of the usual 130 to 135. This same class entering in 2012 listed the curriculum reform first and financial aid ninth as strengths of the law school.

What else was happening in 2008 and 09 when the applications increased by nearly 33% per year? 

In 2009 and 10, while W&L applications were on the rise, the US News ranking fell from 25-34 (while its reputation rank among academics stayed steady).   It has now recovered to 24.  If anything, that should have led to a drop in applications during 2008-2011 rather than the sharp increases that actually occurred.

Can we exclude all other possible explanations than those previously mentioned?  Of course not.  It could be that being in a small, beautiful mountain town is all the rage among young adults and 33% more students want that now than wanted it in 2007. I know of no data to prove or disprove that proposition, so it remains one that could be true. The reality is that the students who have come in recent years rate the curriculum reform among the top reasons (often the most important reason) for their attendance at W&L. That matters.

There is empirical evidence that the W&L curriculum reform is engaging students more than in the traditional “no plan” third year curriculum. Is it perfect evidence? Of course not.  Is it definitive evidence that has no flaw? Of course not. Is anything ever supported by perfect, definite evidence that has no flaw? Not to my knowledge.  We make all of our most important decisions in life based on the best available evidence. As long as the evidence is empirically sound and statistically significant, it is worthy of respect. The evidence of W&L 3L engagement increases is sound and statistically significant and marks a path toward further research and verification.

One commenter suggested that the data is suspect because the peer schools have not been identified. Their data belongs to them, not W&L.  LSSSE does not make specific school data available to other schools.  So W&L has only a composite score for those peer schools. And it would be unseemly for W&L to reveal the specific schools.  I will not do so here. But to be sure, W&L asked LSSSE to calculate the data from a list of schools because they are the schools with whom W&L competes for students and competes in the rankings. It would not have served W&L’s research interests to learn how it compares with a list of schools that it does not compete with in the marketplace. No one at W&L has the data for any specific school. 

Nonetheless, do not be mistaken, the schools with whom W&L is compared in LSSSE data are the schools anyone would expect them to be: schools that by their geography, rank and quality compete with W&L in the relevant markets for students and placement.

One observation: in the legal profession and legal education in particular, the status quo never seems to need empirical justification.  Only change is suspect and wrong until proven definitively to be otherwise. Is there any empirical evidence that the status quo third year is the best possible third year except that it has been done that way for a long time? None that I know of. The old adage, “if it ain’t broke don’t fix it” does not apply here.  The third year of legal education is “broke”.

Amid calls for its abandonment by some, dating back at least to the early 1970s report by Paul Carrington, the third year is widely acknowledged to be of the least value among the three years. (See below on W&L’s largely unchanged  approach to years 1 and 2.) The Roman Legions (and more than a few other military powers) have found out that the mere fact that something has been successfully done before is not sufficient evidence that it will prevail in the present or future. Arguing in favor of the status quo based on no empirical evidence, . . . based only on instinct and the argument that it is the way things are currently done, is an approach doomed to failure.  Just ask Kodak. (And see my forthcoming book: “The American Legal Profession In Crisis,” Oxford, March 2013.)

How about the claim that “[W&L’s LSAT has] gone down every year since [the new curriculum was announced], while its GPA rank has, after a plunge, more or less returned to where it was.” The blogger made that claim, once again without any data, let alone empirically credible data.  Actually the W&L median LSAT was steady at 166 from 2005-2010, dropped 2 points to 164 in 2011 and stayed at 164 for 2012. It has not “gone down every year since [the new curriculum was announced in 2008].” Meanwhile, the GPA of entering classes, which was in the 3.5 and 3.4 range in 2008-2010, has gone up to the 3.6 range (3.65 and 3.62) in 2011 and 2012. The two modest changes in LSAT and GPA have essentially off-set one another in US News points. Hardly the reason for pause suggested by the blogger.

It seems that as long as someone is arguing against change, no rules apply to the arguments’ underpinnings.

Here is what the empirical evidence from the LSSSE surveys shows and what it does not show: students are more engaged in their work and their work includes more writing, more collaboration and more problem solving. Here are a few charts even more striking than those Bill used in his post. Together they say that significantly more than their peers or their predecessors at W&L, current third year students are working more, writing more, collaborating more, applying law to real world problems more, and preparing for class more often. Overall, they describe a harder-working, more engaged student body. And they are working harder at acquire the skills that matter to success as a lawyer.

Wlone

Continue reading

February 13, 2013 in Blog posts worth reading, Current events, Data on legal education, Innovations in law, Innovations in legal education, New and Noteworthy, Scholarship on legal education, Structural change | Permalink | Comments (6)

Saturday, February 9, 2013

"LPOs Stealing Deal Work from Law Firms"

That is the title of this video interview of  law firm consultant Kent Zimmermann of the Zeughauser Group.  In the interview, Zimmermann relates a story from a recent large law firm retreat in which one of the partners raised her hand and said that one of her major clients in the healthcare industry recently used Axiom in an M&A deal.  Not for due diligence.  They used Axiom for the whole deal.

For what it is worth, I think we have a language / perceptions gap at work here.  At least in the winter of 2013, the phrase "Legal Process Outsourcers" tends to connote masses of low-level attorneys toiling away doing low-level work in India, the Philippines, South Africa or in small or middle market cities in the U.S. -- i.e., a simple labor arbitrage play.  

But Axiom's competitive advantage is in understanding the clients' needs and working backwards to a solution.  The value here is in (a) listening carefully to the client (e.g., "we want the same or better quality but lower and more predictable pricing"), and (b) in designing and building a system that delivers that outcome.

For background on Axiom, read this eyeopening article, "Disruptive Innovation", from The American Lawyer.  Axiom has backing from Sandhill Road venture capital and Wall Steet private equity.  One of their investors is quoted, “Axiom has an opportunity to disrupt an industry that hasn’t materially changed in a century. ... With a worldwide legal market that is a trillion dollars each year, there is plenty of running room to build a successful business."

Water runs downhill.  There is a lot of money to be made by making law more efficient and affordable.  Lawyers need to facilitate this outcome, not obstruct it, as society needs and wants better, more affordable access to legal solutions.  Process-driven legal services and legal products are the future.  Indeed, as the cyberpunk science fiction writer, William Gibson, once quipped, "the future is already here — it's just not very evenly distributed."

For my own views on the incipient revolution that threatens 100 years of established hierarchy, see "Losing the Law Business," Cayman Financial Review (Jan 2013); for the implications for legal education, see Section II.C of A Blueprint for Change.

[posted by Bill Henderson]

February 9, 2013 in Blog posts worth reading, Current events, Data on the profession, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change, Video interviews | Permalink | Comments (3)

Monday, February 4, 2013

"We Need a New Kind of Learner"

Via the Big Think, [though I added in the references to law students] BigThink

The 21st century requires a new kind of learner—not someone who can simply churn out answers by rote, as has been done in the past, but a student who can think expansively and solve problems resourcefully. The traditional academic skills of reading, ’riting, and ’rithmetic must be replaced with creativity, curiosity, critical thinking and problem solving, and collaborative and communication skills in order to solve the complex problems of tomorrow. ...

[I]magine that knowledge is a multisided box. When we teach [law students] to simply memorize material so they can pass tests, we give [law students] access to the knowledge on only one side of the box. So when life tosses this box up (as it certainly will), it may not land on a side that is visible and accessible. In this case, the [law students] don’t have access to the knowledge. ...

[Students] need to learn to navigate the course of acquiring knowledge—essentially, to get to the answers by being curious and coming up with a lot of questions, a lot of whys. They need to get accustomed to learning from different directions, playing with concepts, and figuring out how to ask the whys in order to gain access to knowledge. This process is more important than having the knowledge itself

The author is Ainissa Ramirez.  She is an author and science evalengist who recently wrote the ebook Save our Science: How to Inspire a New Generation of Scientists. I think the identical issues apply to law students.  Education needs to be cheaper, yes.  But to hold our society together, it also needs to be better.

[posted by Bill Henderson]

February 4, 2013 in Blog posts worth reading, Cross industry comparisons | Permalink | Comments (4)

Sunday, December 16, 2012

Job Meltdown and Debt Crisis Among Veterinary School Graduates

Dr_Clark_s_PictureA colleague passed along a link to a thought-provoking blog post by Dr. Andrew Clark, a veterinary doctor who runs a consulting practice on the business of veterinary medicine.  His business gives him a bird's eye view of the forces roiling the industry. 

Suffice to say, what is happening in the veterinary education, and the broader vet industry, is eerily close to the problems in legal education and the legal profession. 

Here is an excerpt of Dr. Clark's in-the-trenches view.  The post is titled, "Student Debt ... Our Best Thinking Got Us Here":

If you follow my blog or have worked with me, you already know that one of my favorite sayings is “our best thinking got us here.” That is certainly the case with the Veterinary Student Debt situation. We need some new thinking regarding what generates student debt and what hampers the ability of students to pay back the debt.

In the course of my management consulting business, I am fortunate to work at the interaction intersection between Veterinarians, Veterinary practices, Veterinary Colleges, Veterinary Students and Businesses that provide services and products to the veterinary profession. One of the most common and sincere concerns expressed by people in all of the groups is concern over the impact of student debt on the profession. The student debt situation is a circular process involving Veterinary students, Veterinary colleges, the AVMA, lenders and Veterinary Practices (employers).

I don’t have a solution to the problem but I have some observations and ideas that could be woven into the fabric of a different strategy for financing veterinary education. Although it may happen, my intent is not to offend everyone in the entire veterinary profession with one blog but rather to stimulate creativity and innovation.

Veterinary Compensation

Because the most common theme in discussions involving student debt is “Veterinary jobs should pay more,” I will enter the circle at the Veterinary Practice (employers) point. The assumption seems to be that every Veterinary business is profitable enough to pay whatever is necessary to cover student loans. When graduate Veterinarians enter the workforce a huge majority become employed by small businesses. No amount of marketing, posturing, denial or wishful thinking will change the fact that small businesses success or failure is driven by supply and demand.

From my position in the industry, in the economy in which we all work, the demand for veterinary services appears smaller than the supply of veterinarians. I routinely look at the financial statements of over 50 veterinary practices; equine, mixed and companion animal. Those financial statements demonstrate that practices do not generate enough profit to pay Veterinarians sufficiently to repay student loans under the repayment terms commonly available. That is a remarkably bad situation since the successful transfer of the Veterinary Profession from one generation to another is dependent upon the next generation being solvent and content.

Many practices are changing management practices to become profitable. That will help when practices generate enough earnings to add higher veterinary compensation to the cost structure of the business and remain solvent. Clearly compensation is not a realistic short term ‘fix’ until supply and demand for veterinary services shifts back to favor the Veterinarian.

Lenders ...

Lenders are rightfully concerned about security when they loan anyone money including students. Bankruptcy on student loans used to be a big loss for lenders. However, under the new regulations, student loans cannot be discharged by bankruptcy so there is significantly less risk now. [I wonder if the veterinary industry has its own Matt Leichter.]

Veterinary Colleges

When the dust all settles, Veterinary Colleges are in the business of selling Veterinary Medical Degrees to students who buy a degree with the intention of using it to make a living. In the age of austerity, Veterinary colleges have faced massive budget cuts. One response has been to increase class size, generating tuition revenue for the school. In effect, the colleges are generating more customers for their product and increasing the supply of veterinarians.

From my perspective and experience, the veterinary profession is upside down as far as supply and demand goes. We have inadequate demand for Veterinary services to support the number of veterinarians in practice. Increasing class size diminishes the earning potential and therefore the value of a Veterinary Medical degree yet the cost of the degree continues to escalate. That strategy only works for schools because student loans are easy to acquire and young consumers following their life’s dream are still willing to borrow the money to purchase the degree at an ever higher price with challenging terms. ...

AVMA Accreditation

It is difficult for me, a person working in ‘the business trenches’ of veterinary medicine, to understand the timing of the AVMA’s decision to accredit more schools. This clearly increases supply of veterinarians in the face of decreasing demand for veterinary services thereby reducing the value of a veterinary degree and the earning power of a veterinarian, both of which contribute to student debt management challenges.

Another component of accreditation that is an integral part of the challenge of rising student debt is the requirement to have a research program in order for a school to be accredited by the AVMA. The paradigm that effective teaching of veterinary students requires faculty involved in a research programs has never been assessed to be of measurable benefit to student success in general or even specialty practice.

In general, Assistant, Associate and Full Professor ranked positions are allotted 50% FTE (Full Time Equivalent) in non-teaching functions which include research. Who is paying for that 50% of their time? Many veterinary schools have chosen to hire instructor level individuals that are nearly 100% FTE in teaching to release higher ranked faculty to do research. Why are these instructors that do no or very little research acceptable as educators, when the need for research to enhance education is the paradigm?

The world is changing around us and we need to have a fresh look at research program requirements for accrediting schools. It is impossible to understand how the cost of faculty in 50% FTE positions is not passed along to the student in the form of tuition fees, etc. That component of tuition is financed by student debt. ...

Epilog[ue]

This blog is aggregations of realities that I observe in the course of helping veterinarians manage their businesses and new graduates manage their debt. Although I am not in a position to resolve these challenges, I am in a position to share my observations and invite people in policy making capacities to use some new thinking. After all, our best thinking got us here. ....

[posted by Bill Henderson]

December 16, 2012 in Blog posts worth reading, Cross industry comparisons, New and Noteworthy | Permalink | Comments (14)

A Virtual Lawyer Speaking Crowdsourced Wisdom

PopularmechanicsAccording to this article in Popular Mechanics, virtual lawyers speaking crowdsourced wisdom is one of 110 predictions that will  come to pass over the next 110 years.  The occasion is the 110th anniversary of this revered magazine. Here is the blurb:

A virtual lawyer will help you plan your estate. "I don't mean avatars," Cisco's Dave Evans [Cisco's chief futurist] says. "I mean virtual people—self-contained, thinking organisms indistinguishable from humans." Sounds crazy, right? But surely you've seen the magic of CGI [Computer Generated Imagery]. What's to say you can't attach a lifelike visage to an interface fronting the crowdsourced wisdom of the Internet? Give it a nice head of hair, teach it how to smile, and you're looking at a brilliant legal eagle with awesome people skills.

If this makes you worried, note that the magazine also predicts annual physicals being done through a cellphone app.

December 16, 2012 in Blog posts worth reading, Cross industry comparisons, New and Noteworthy | Permalink | Comments (2)

Wednesday, December 5, 2012

Predictive Coding is a Disruptive Innovation that will Change How Law is Practiced

PredictivecodingdummiesI have been reading about predictive coding for a few months now, and that is my conclusion.  Predictive coding is the use of computer algorithms and machine learning to conduct the review of electronically stored information (ESI).  For a useful primer, see Frederick Kopec, Predictive Coding in eDiscovery or Predictive Coding for Dummies (remarkably, there are two editions, one by Symantec and the other by Recommind, see Legal Tech Insider, A Tale of Two Predictive Coding Books).

From the client perspective, predictive coding is at least as good as first-level human review (typically junior attorneys screening for relevance and privilege) but dramatically less expensive.  And note, whatever efficiency and accuracy benefits predictive coding has today, it will only improve in the months and years  to come.  It contrast, our processing capacity as humans is, well, static.

KrollontrackThe big players in the space are Kroll Ontrack and Recommind. These are not insignificant companies.  Kroll Ontrack started as a hard disk recovery service and evolved into the e-discovery and information management services. It now employs 1,500 workers in eleven U.S. and nineteen foreign locations around the world.  In 2010, Kroll Ontrack had revenues of $250 million. A few layers up, it is owned by the Private Equity giant Providence Equity Partners

RecommindRecommind has approximately $15 million in annual revenues and approximately 100 employees spread over facilities in Massachusetts, California, London, Germany, and Australia.  According to this June 2012 story at the CIO Agenda at Computer Business Review, Recommind is gearing up to go public.

Howard-SklarHoward Sklar, Senior Corporate Counsel for Recommind, just posted an essay entitled, Legal Acceptance of Predictive Coding: A Journey in Three Parts.  The parts are: (1) acceptance that predictive coding reasonable, (2) arguments that it is better and thus must be used in this case, (3) sua sponte judicial order that it be used. The fourth part, still to come argues Sklar, is a state bar ethics watchdog issuing a ruling that failure to use predictive coding is unethical. 

Here is an excerpt from Sklar's post:

There’s a certain trajectory for technology adoption.  Early adopters, mainstream acceptance, laggards.  But, slow or fast, adoption occurs.  The law is the same way, in its own fashion.  But the legal acceptance of predictive coding has had a path that’s unorthodox.  From the legal perspective, predictive coding has gone through three cycles, not entirely as expected.

In cycle one, companies began using predictive coding.  The efficiencies are compelling.  Better end results in less time at a cost savings.  An ability to better find and understand the facts embedded—sometimes hidden—in your documents.  These things are crucial in today’s corporate world.  Law firms were slower, but generally followed their clients into predictive coding, and soon saw the benefits first hand.

Other vendors—usually the first to adopt new technology—were laggards.  They fought the adoption of predictive coding as long as they could, mainly because they didn’t have the capability to do it themselves.  Eighteen months ago, the most frequent question I would get at conferences was “has there been a court case approving the use of predictive coding?”  In the “ridicule it and it will go away” marketing approach, they were hoping to scare corporations and law firms away from the benefits corporations could achieve.

Then came Da Silva Moore and Global Aerospace [which, against the objections of one of the litigants, ruled that predictive coding was a judicially reasonable method of conducting discovery.]  ...

During this period, other vendors stopped criticizing predictive coding and started marketing it—sometimes with the capability, sometimes without.  ...

After waiting for the first decision approving the use of predictive coding, we went to stage two faster than anyone had thought possible: not whether you can use predictive coding, but whether you must use it.  This was the argument in the Kleen Products case.  The defendants had completed their review, and the plaintiffs’ argued that the review was defective because predictive coding wasn’t used.  Eventually, the parties cooperated to end that dispute, but the argument had been made. ...

We’re now in stage three: a court has sua sponte ordered the use predictive coding.  And not just any court, the Delaware Chancellery Court, one of the most important corporate courts in the nation.

In the future, we’ll enter stage four: the decision by a state bar’s ethics watchdog that failure to use predictive coding is ethically questionable, if not unethical.   After all, purposefully using a less-efficient, less accurate, more expensive option is problematic.  I think that’s probably 18 months away.  But given how fast we’ve gone through the first three states, stage four may come next week.

[posted by Bill Henderson]

December 5, 2012 in Blog posts worth reading, Data on the profession, Innovations in law, New and Noteworthy, Structural change | Permalink | Comments (0)

Sunday, December 2, 2012

More on Big Data

Below is an interview of David Cowen by Monica Bay, editor-in-chief of ALM's Law Technology News.  The topic is Big Data.  The interview provides a useful glimpse on how this trend is corporate America is taking hold.  It should be of great interest to lawyers because (a) it has enormous economic value, and (b) it raises novel privacy issues.  Which will predominate? [posted by Bill Henderson]

December 2, 2012 in Blog posts worth reading, Cross industry comparisons, Current events, New and Noteworthy, Video interviews | Permalink | Comments (0)

Wednesday, November 21, 2012

An Open Letter to India's Graduating Classes

From far away, knowledge workers in India appear to be a formidable and growing threat to American college graduates.  But according to Mohit Chandra's essay, "An Open Letter to India's Graduating Classes," which appeared in the India Ink section of the NY Time/International Herald Tribune, the current generation of Indian university and professional school graduates is hindered by a serious skills and values gap.   MohitchandraIndeed, the author, a partner at KPMG in Delhi, chastises the newly minted 2012 graduates for being spoiled and behaving unprofessionally. 

There are two crosscurrents at work here that are quite difficult to untangle: (1) the process of globalization, which is linking together the economies--and thus the cultures--of India and the U.S.; and (2) workplace generational frictions, which apparently are just as vexing in India as they are in the U.S.  As a mid-career Indian professional with an MBA from Ohio State and a work history that includes KPMG, Capital One, McKinsey & Company, and Ernst & Young, Chandra sits on top of both of these faultlines. 

I think Americans might be surprised by both the content and tone of Chandra's letter, which cannot be judged by western standards.  The letter reveals as much about the U.S., and humanity, as it does about India.  Quite a read.

Dear Graduates and Post-Graduates,

This is your new employer. We are an Indian company, a bank, a consulting firm, a multinational corporation, a public sector utility and everything in between. We are the givers of your paycheck, of the brand name you covet, of the references you will rely on for years to come and of the training that will shape your professional path.

Millions of you have recently graduated or will graduate over the next few weeks. Many of you are probably feeling quite proud – you’ve landed your first job, discussions around salaries and job titles are over, and you’re ready to contribute.

Life is good – except that it’s not. Not for us, your employers, at least. Most of your contributions will be substandard and lack ambition, frustrating and of limited productivity. We are gearing ourselves up for broken promises and unmet expectations. Sorry to be the messenger of bad news.

Today, we regret to inform you that you are spoiled. You are spoiled by the “India growth story”; by an illusion that the Indian education system is capable of producing the talent that we, your companies, most crave; by the imbalance of demand and supply for real talent; by the deceleration of economic growth in the mature West; and by the law of large numbers in India, which creates pockets of highly skilled people who are justly feted but ultimately make up less than 10 percent of all of you.

So why this letter, and why should you read on? Well, because based on collective experience of hiring and developing young people like you over the years, some truths have become apparent. ...

There are five key attributes employers typically seek and, in fact, will value more and more in the future. Unfortunately, these are often lacking in you and your colleagues.

1.You speak and write English fluently: We know this is rarely the case. Even graduates from better-known institutions can be hard to understand.

Exhibit No. 1: Below is an actual excerpt from a résumé we received from a “highly qualified and educated” person. This is the applicant’s “objective statement:”

“To be a part of an organization wherein I could cherish my erudite dexterity to learn the nitigrities of consulting”

Huh? Anyone know what that means? We certainly don’t.

Continue reading

November 21, 2012 in Blog posts worth reading, Cross industry comparisons | Permalink | Comments (2)

Wednesday, November 7, 2012

"2012 was the First Moneyball Election"

So concludes John Sides (GW Political Science) at The Monkey Cage.  John writes:

Barack Obama’s victory tonight is also a victory for the Moneyball approach to politics.  It shows us that we can use systematic data—economic data, polling data—to separate momentum from no-mentum, to dispense with the gaseous emanations of pundits’ “guts,” and ultimately to forecast the winner.  The means and methods of political science, social science, and statistics, including polls, are not perfect, and Nate Silver is not our “algorithmic overlord” (a point I don’t think he would disagree with).

But 2012 has showed how useful and necessary these tools are for understanding how politics and elections work. ...

And a fitting comic courtesy of xkcd:

Electionmath

[posted by Bill Henderson]

November 7, 2012 in Blog posts worth reading, Current events, New and Noteworthy | Permalink | Comments (3)

Thursday, September 20, 2012

The Eds and Meds Sector

There is a fascinating story at newgeography which looks at trends in the education ("Eds") and medical ("Meds") sectors. 

Newgeography focuses on trends in urban affairs and economic geography.  Eds and Meds are of interest to this group because these two sectors have been such a critical part of maintaining or restoring many regions' economic vitality.  Why?  Universities and hospitals generally pay high wages, don't lay people off, and are perceived as long term drivers of growth because more degrees and longer life spans are two trends that will probably continue. 

But the author, Aaron Renn, presents compelling trend data suggesting that America can no longer to afford extra large helpings of Eds and Meds.  As shown in the chart below, these sectors have been growing faster than virtually all other sectors for a long, long time.

Renn-eds-meds-1

Renn points out the healthcare is on its way to consuming 20% of our GDP by the year 2021.  And the growth in the higher education sector has been substantially fueled by student loans.  Unfortunately, even college grads are subject to the pressures of outsourcing and competition with very able professionals from around the globe.  So the ability to repay all that debt can't be taken for granted.  What can't go on forever, won't.

Here is another chart presented by Renn, this one presenting the rates of inflation occuring in Eds and Meds sectors as compared to the overall CPI:

Renn-eds-meds-2
KaplanThere is an opportunity here.  I would be extremely bullish on innovations that produce productivity gains in the Eds and Meds sectors.  I recently listened to this HBR Ideocast discussion with Robert Kaplan, the Harvard Business School professor best know for developing the Balanced Scorecard.  Kaplan is now turning his considerable intellect toward the problem of cost-containment in healthcare. 

What the key insight?  Measuring how much patient treatment actually costs--to date, there has been almost no sophisticated cost accounting in healthcare.  Most of the brainpower has gone to dealing with (and maximizing) third party reimbursements.  Under Kaplan's system, fortunately, we can actually identify the points in the system that cost way too much and thus begin the reengineering process.

ChristiansenThe same thing may soon be happening in higher ed.  Another Harvard Business School professor, Clayton Christiansen, who authored the renowed business book, The Innovator's Dilemma, recently co-authored a letter that called for colleges and universities to quit chasing prestige and start focusing on innovations that improve educational quality without increasing price.  Remarkably, the letter was included in a mass mailing by the American Council of Trustees and Alumni -- going to 13,000 trustees!  See Inside Higher Ed, Distruption's Strange Bedfellow, July 12, 2102.  Another Insider Higher Ed story suggests that this may be the true faultline driving the University of Virginia controversy.  See Disruptive Innovation: Rhetoric or Reality?, June 26, 2012.

The world appears to be changing, even in Eds and Meds sector.

[posted by Bill Henderson]

September 20, 2012 in Blog posts worth reading, Cross industry comparisons, Current events, Important research, New and Noteworthy, Structural change | Permalink | Comments (1)

Sunday, September 2, 2012

"There is a Shortage of Skilled Workers"

That is the message delivered by Patricia Milligan, president of Mercer's human capital business.   Who are the workers she is talking out?  Managers, technicians and executives working inside the world's biggest companies.

I realize that many lawyers and law professors are likely to be skeptical of the pronouncements of human capital consultants.

But for a moment, let's take Milligan at face value.  So, what are the skills in short supply?  Milligan does not answer that question in the above video.  But in the video on this webpage she suggests that such skills are  a combination of communication, colloboration, and data analytic skills. 

Note that Milligan thinks the talent shortage problem is too big for employers to solve on their own.  This is leading to collaborations with academic institutions.  Are law schools ready for such a step?

[posted by Bill Henderson]

September 2, 2012 in Blog posts worth reading, Cross industry comparisons, New and Noteworthy, Video interviews | Permalink | Comments (1)

Saturday, September 1, 2012

"Application, Discipline, Focus, Repetition"

For the Labor Day weekend, I thought I would post this video of Henry Rollins, an American singer and artist who has continually reinvented himself since he left his job as a manager of a Hagen-Daaz ice cream store in 1981 to become the lead singer in Black Flag.

The point of posting this video is not to glorify Henry Rollins, but to consider, on its own terms, the life narrative of one interesting person. Rollin's formula of "application, discipline, focus, repetition" sounds a lot like deliberate practice.  Based on my own research, I have broken this process into two steps:

  1. Identifying the core elements needed to be become an expert or master in a specific domain -- Jeff Lipshaw was alluding to this in his post on Donald Schon and reflective practice;
  2. Practicing, through thousands of hours of effort, on elements that one lacks in order to move along the continuum to mastery.  Number 2 works best when the person has the benefit of feedback and coaching.  Of course, they also have to be willing to do the work.

For an individual, it may not be necessary to formally break down the core elements into specific pieces.  Instead, these pieces can be obtained iteratively through trial and error and reflection.  I think this is what Rollins has done. It is a formula that works for one highly determined person.  But can it be scaled?

As an educator, I am interested in making the components of practice mastery more explicit and transparent--this is step #1 above.  To  accomplish step #1, we still need to do foundational research that  deconstructs the careers of outstanding lawyers into sets of specific skills, abilities, and competencies--i.e., the things to be practiced.   (Notice I said "sets" -- outstanding lawyers often master different domains.)  At present, the Shultz-Zedeck Effective Lawyering study is the only solid published research that is even adjacent to this topic.

Once these components of effective lawyers are identified--i.e., a law school identifies the skills, abilities and competencies it wants to develop over the course of three years--we move to step #2.  This step raises complex questions of order (which competencies first, which come second, etc.) and pedagogy (best and most cost-effective methods) and measurement (how do we know we have made progress?).   I think the answers would have to come iteratively, through trial and error. 

Any educational institution pursuing this strategy would have to commit itself to studying and continuously improving the educational process.  For law schools, this would be new.  At the vast majority of law schools, we mostly teach legal knowledge, we don't articulate our intended educational outcomes, we let students pick their courses ala carte with minimal guidance, and we don't engage in serious measurement. But we could.  I think this is the next great frontier--an enormous opportunity for any law school willing to think for itself, to experiment and to change.  The data needed would come from one's own alumni, ideally supplemented with data sharing within a law school consortium.

[posted by Bill Henderson]

September 1, 2012 in Blog posts worth reading, Cross industry comparisons, Innovations in legal education, Video interviews | Permalink | Comments (1)

Wednesday, August 15, 2012

Changing Conventions of What Counts as Serious

Tom-goldsteinOver at the Volokh Conspiracy, Orin Kerr (GWU Law) links to a fascinating interview with Tom Goldstein, the Supreme Court advocate who started the SCOTUSblog many years ago in the early days of the blogosphere. 

Goldstein's comments on the evolution of SCOTUSblog throw into sharp relief how the online world is gradually creating new institutions that chafe against established conventions of what is professionally or academically serious.  I am not kidding -- 50,000 visitors to the site a day, including hundreds or even thousands from inside the Supreme Court itself.  In comparison, Harvard Law Review has an annual subscriber base of 2,000 total.  (Goldstein mentions this in passing--the absolute pitch perfect way to deliver news like this.)

ScotusblogAnother interesting point made by Goldstein was how SCOTUSblog was originally started as a vehicle for marketing Goldstein's firm.  Yet, as readership took hold, he completely abandoned any attempt to directly advance the interests of his firm through editorial content--the benefits of cultivating a perception of objectivity were very indirect but ultimately much greater.  So journalistic firewalls have been erected.  If his firm is handling a case before the Court, or making a filing, it not discussed on the blog by anyone from the firm.  Outside commentators handle any relevant commentary.  Objectivity and thoroughness are the goals.

SCOTUSblog has also gravitated away from analysis done by students at Stanford and Harvard, where Goldstein runs Supreme Court clinics, to analysis by leading subject matter experts. (In the legal academy, we are often clamoring for peer review -- well, Goldstein has acheived it.) SCOTUSblog now runs well-attended symposia.

Folks, SCOTUSblog has become a highly influential institution that is closely followed by the Supreme Court itself.  And it started as a blog.  In fact, it still is a blog.  Based purely on reach and influence, it is more serious than any center operating out of a law school. 

Perhaps it is time for us to be more openminded about what "counts" as serious.  What Goldstein has created looks very serious to me.  (H/T to Orin Kerr for directing me to this excellent video.)

[posted by Bill Henderson]

August 15, 2012 in Blog posts worth reading, Government lawyers, Video interviews | Permalink | Comments (6)

Friday, August 10, 2012

Federal Funding of Higher Education--A Bubble that is Going to Burst

NPR's Planet Money has a story on interplay between higher college and university tuition and changes in financial aid.  As shown in the graphic below (from the College Board), the federal government is assuming a larger role in finaning higher education. Every other source of funding is shrinking its a proportionate contribution to financial aid.  Despite favorable bankruptcy laws enacted in 2005, the federal takeover of higher ed financing has almost completely muscled out the private lenders.

Gr-pm-studentfinances3column-462

Coincidentally, a colleague forwarded to me a pointed commentary from zerohedge.com, which suggests that recent comments by Ben Bernanke portend serious financial instability.  In 2007, Bernanke said:

"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained" - March 28, 2007.

Two days ago, Bernanke said:

"I don’t think student loans are a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government" - August 7, 2012

Now take a look at the federal government's holding of consumer debt (overwhelmingly student debt that has piled up since the 2010 legislation). See Henderson & Zahorsky, The Law School Bubble, ABA Journal (Jan. 2012).

Collegedebt

Student loans are viewed as "assets" by the federal government ... until they become uncollectable, in which case the value of the assets eventually has to be adjusted through write-downs, just like mortgages in the mortgage crisis.  Extensive use of Income-Based Repayment makes it possible for a student loan to be simultaneously uncollectable but not in default.

Folks, I am an unapologetic New Deal Democrat.  But the current "system" of federal higher education financing is near perfect insanity.  We set tuition and, no questions asked, the federal government writes us checks in exact proportion to students' willingness to sign loan papers.  For young people who have never worked, it is all like Monopoly money. 

The only way the math works is if the real earnings go up en masse for virtually all college and professional school graduates.  In a rapidly globalizing world in which our students are competing against Chinese and Indian professionals, the assumption of mass rising real incomes is implausible.  See, e.g., views of economist Alan Blinder in this NPR article.

Right now we--higher ed and the nation as a whole--are maintaining the illusion of prosperity through debt financing heaped on naive young people.  This is immoral in the extreme.  Moreover, in the long run, it is economic and political ruination.

The only long term solution is cost containment imposed on higher ed by reforming the terms of federal financing.  The financing has to incentivize educational productivity -- i.e., fewer tuition dollars expended to obtain better skills and learning as measured by marketplace earnings and innovation.  No more $100,000 checks from the federal government for sorting students by standardized test scores.  Our graduates will actually have to think, collaborate, communicate and problem-solve at a very high level.  How many of my fellow law professors grasp the depth of our problems?  Not enough.

[Posted by Bill Henderson]

August 10, 2012 in Blog posts worth reading, Cross industry comparisons, Current events, Structural change | Permalink | Comments (9)

Friday, August 3, 2012

Connecting the Dots on the Structural Shift in the Legal Market

Over a 3 Geeks, Toby Brown asks, "Is the legal market flat?"  Toby's analysis is especially interesting because of his day job -- he is a strategy professional at an AmLaw 50 firm who focuses on pricing and market analytics.  In that capacity, he has access to the various proprietary databases that track legal spending.  Toby writes, "Although there have been minor ups and downs on this stat (most recently a slight up-tick), the overall demand has been and continues to be predicted as … flat."

But then Toby wonders if the stats are potentially misleading because the databases define the market as BigLaw. If work is leaking out of this market and going to new entrants, flat revenues may mask a reconfiguration of the legal marketplace--one where BigLaw is less dominant.

Pangea3As evidence for this possible trend, Toby links to an article on Pangea3, which is a legal process outsourcing (LPO) owned by Thomson-Reuters (a publicly traded company).  Since its inception in 2003, Pangea3 has grown at "40% to 60%" per year and is "growing even faster" in 2012.  Pangea3 now employs 850 lawyers, mostly in India.

Now think about that: 850 lawyers growing at 50% per year for five years is 6,455 lawyers--by 2017.  And that is just one LPO.  

HuronHuron Consulting Group (NASDAQ: HURN) recently issued a press release announcing a new document review and data operations facility in Gurgeon, India (functionally a booming suburb of India--I've been there).  The press release reads, "The Company offers around-the-clock global discovery support with 1,500 seats at nine locations across the U.S., U.K., and India to address clients’ complex business needs."  MindcrestAs I noted in an earlier post, Mindcrest, with HQ offices in Chicago but facilities in India, is also growing at a breakneck pace.

Toby draws a conclusion: "The simple math of 50% market growth suggests LPOs are taking market share from firms." 

In my estimation, very few lawyers or law professors grasp what is taking place here.  We look at flat revenues in BigLaw and draw the inference that we are in a prolonged recession.  Meanwhile, the legal business is absolutely booming in India, thanks in substantial measure to its integration into the U.S. and U.K. legal supply chain.  Play these trends forward for five more years, and the prolonged recession storyline will no longer be credible. 

And remarkably, the drivers of this change are publicly traded companies or companies funded by venture capital and private equity.

Beyond Toby's observations, I would add the following to the big picture. The ABA Commission on Ethics 20/20 was recently pressured to drop its recommendation for even a very most modest change to the Rule 5.4 prohibition on fee splitting with nonlawyers.  (see here.)  This effort was lead by the Illinois State Bar Association, which wanted to shut down debate on this topic during the August ABA Annual Meeting in Chicago. 

I fear that the U.S. legal profession is looking through the wrong end of the telescope.  In a practical sense, fee spliting only applies to counseling and advocacy.  But the full legal supply chain includes a host of legal products and inputs that Wall Street and Sand Hill Road capitalists are anxious to supply.  This supply chain analysis is especially true when the client is a Fortune 500 corporation.  The policy that drives fee-splitting is consumer protection and a belief that the nonlawyer profit motive will compromise lawyer independence and injure the client.   Yet, organizational clients want innovation and more for less.  And they are finding non-law firm vendors who are filling that need.   The organized bar is powerless to stop these changes. 

[posted by Bill Henderson]

August 3, 2012 in Blog posts worth reading, Current events, Data on the profession, Innovations in law, Law Firms, Legal Departments, New and Noteworthy, Structural change | Permalink | Comments (4)